Akron venture helps make inroads into export market

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American small businesses are beginning to make inroads in exporting to China, USA Todayreports, based in part on the efforts of an Akron-based venture called Export Now.

“While more than 99% of U.S. businesses are small or midsize enterprises, they account for a relatively small share of U.S. exports, according to a 2010 report by the U.S. International Trade Commission,” the newspaper reports.

But the mindset of many small business owners is starting to change, USA Today notes, “as e-commerce sites make it easier than before to get products affordably marketed and distributed to consumers overseas.” In addition, the Obama administration, as part of its goal to double U.S. exports to $3.15 trillion by 2015, also is working to remove export barriers, the newspaper says.

Export Now, started by Frank Lavin, a former U.S. undersecretary of commerce for international trade, is helping American businesses list their products on a Chinese website called Tmall. The Akron venture “translates the description of the company's product into Mandarin for the website, takes care of customer questions and sends out the product,” USA Today says. “It also collects the sales proceeds in yuan, China's official currency, then remits the money to American businesses in U.S. dollars.”

Mr. Lavin tells the newspaper, “China has a booming middle class, and there is real appetite for American products, but (language and currency) barriers can make it difficult to export there.”

Frosty relationship

The Wall Street Journalreports that a dispute being played out in court is “shining a spotlight on tensions between franchise owners and management.”

What the newspaper calls a “growing rift” between franchisees and franchisers — which collectively employ about 8 million people in this country — “follows three consecutive years of declines in the number of U.S. franchises, and as economic pressures prompt people to limit discretionary spending.”

In the dispute, an association of about 185 U.S. franchise owners filed a lawsuit late last month against Cold Stone Creamery Inc., a subsidiary of Kahala Corp., “accusing the ice cream chain of refusing to provide detailed information about funds that the franchisees believe should be set aside for their benefit in a marketing fund,” The Journal reports.

The lawsuit asks the court “to force Cold Stone to provide the franchisees with information on how much of the rebate money it receives from its approved vendors is actually used for marketing purposes.” The franchisee association also wants “insight into what the company does with revenue and interest generated from sales of unused gift cards,” The Journal says.

A Kahala spokeswoman declined to provide specifics on the profitability of the typical franchisee or the figures provided by third parties.

Resis the urge to merge

An Obama administration plan to merge six government agencies that deal with trade and commerce, including the Small Business Administration, might save money, but it will be counterproductive to the cause of helping small companies grow.

“Compared with the multiple disadvantages to small business of eliminating the 3,400-person SBA as a separate agency, the benefits are small, even with the President elevating SBA chief Karen Mills to a cabinet-level post,” Prof. Shane writes. “Although the odds are low that Congress would give the President the authority to merge the agencies in a Presidential election year, small business advocates should push back against his proposal.”

He argues that the merger “would eliminate the main advocate for small business in Washington. Big business has different objectives than small business. If you combine several agencies focused largely on big company issues with one focused on small company issues, most of the attention of the combined agency will be on big business's needs.”

Indeed, Prof. Shane concludes that on a per-small business basis, “the SBA is a bargain.”

Doing the math, he writes. “An estimated 27.5 million small businesses were operating in the U.S. in 2009, the most recent year data are available. Merging six government agencies, and getting rid of the SBA as an independent agency in the process, will save only $300 million per year. That works out to $11 per business per year. Surely having one part of the government focus on the interests of small companies generates that much value.”